Optimal Unemployment Insurance in a Matching Equilibrium

Melvyn Coles and Adrian Masters

Journal of Labor Economics, 2006, vol. 24, issue 1, 109-138

Abstract: This article considers optimal unemployment insurance (UI) in an equilibrium matching framework where wages are determined by strategic bargaining. It compares the outcome with the standard Nash bargaining approach, which can be interpreted as union wage bargaining with an insider/outsider distortion. It also shows that a coordinated policy approach, one that chooses job creation subsidies and UI optimally, generates a much greater welfare gain than a policy that simply varies UI payments by duration.

Date: 2006
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Citations: View citations in EconPapers (42)

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Working Paper: Optimal Unemployment Insurance in a Matching Equilibrium (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ucp:jlabec:v:24:y:2006:i:1:p:109-138

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